Unauthorised persons may, however, be able to rely on the exclusions for the provision of information in article 33B or5 provision of information on an incidental basis in article 72C to 5avoid the need for authorisation (see PERG 5.6.4AG5 to PERG 5.6.9G which cover exclusions for the provision of information5).

Insurance undertakings are referred to 1MIPRU 51 (Insurance distributors and home finance providers5 using insurance distribution or home finance5 mediation services) as regards their obligations relating to the use of intermediaries generally.

Such companies might typically provide risk or treasury management or administration services which may include regulated activities relating to a contract of insurance. If so, such companies will need authorisation or exemption if they conduct the activities by way of business (see PERG 5.4 (The business test) generally and (3) and (4)). This is unless another exclusion applies.

(3)

In the FCA's view, particular issues arise in applying the 5‘by way of business’5 test to group companies. Recital 11 of the IDD5 states that the Directive should apply to persons whose activity consists in providing insurance or reinsurance distribution5 services to third parties. This Recital 115 suggests that the Directive is intended to apply only where the service is provided to a third party. The expression 'third party' is not defined in the Directive. The FCA considers that a group company that is providing services solely for the benefit of other group companies would not normally be regarded as providing services to a third party. The group company also needs to be receiving remuneration for the activities (see PERG 5.4.2G(1)).5 The FCA also considers that5 a group company providing services solely for the benefit of other group companies should not normally be regarded as satisfying the requirement that it be remunerated for providing insurance distribution5 services to third parties. Were a group company to be remunerated other than by another group company, however, the situation may be different. For example, if the group company receives commission from an insurer or broker, the fact would tend to suggest that the company has been rewarded for providing a service to the insurer or broker. In the FCA's view, it is appropriate to apply this principle to a group as defined in section 421 (Group) of the Act.

(4)

The FCA considers that similar principles to those applied to a group company in (2) may be applied to the participants in a joint enterprise. This would be where one participant in the joint enterprise is providing services solely for the benefit of another participant and for the purposes of the joint enterprise and who provides insurance distribution5 services to one or more participants for the purposes of or in connection with the joint enterprise.

arrangements in connection with lending on the security of insurance policies (article 30 of the Regulated Activities Order (Arranging transactions in connection with lending on the security of insurance policies));

activities carried on in the course of a profession or non-investment business (article 67 (Activities carried on in the course of a profession or non-investment business)) (This exclusion is considered in further detail in PERG 5.11.9 G to PERG 5.11.12 G (Activities carried on in the course of a profession or non-investment business)).

is carried on in the course of carrying on any profession or business which does not otherwise consist of the carrying on of regulated activities in the United Kingdom; and

(2)

may reasonably be regarded as a necessary part of other services provided in the course of that profession or business.

In the FCA's view, the fact that a person may carry on regulated activities in the course of the carrying on of a profession or business does not, of itself, mean that the profession or business consists of regulated activities. This is provided that the main focus of the profession or business does not involve regulated activities and that the regulated activities that are carried on arise in a way that is incidental and complementary to the carrying on of the profession or business.

Although the article 67 exclusion is disapplied (by article 4(4A) of the Regulated Activities Order (Specified investments: general)) when a person takes up or pursues insurance distribution or reinsurance distribution5 as defined by articles 2.1(1), 2.1(2) and 2.2 of the IDD5, there may be cases where a person is not carrying on activities that amount to insurance distribution5. For example, where a person's activities amount simply to the provision of information on an incidental basis in the context of another professional activity, these may fall outside the scope of article 2.1(1) and 2.1(2) of the IDD5 (see PERG 5.16.2G5) and the exclusion in article 67 may then operate to exclude these activities. Also, it is possible that a professional person's activities may not amount to a regulated activity at all. For example, a doctor who provides a medical report to an insurer may be regarded as making arrangements with a view to providing an expert medical opinion rather than with a view to transactions in contracts of insurance. In such cases, article 67 will not be needed.

Article 67 may also apply to activities relating to assignments of insurance policies, as, in the FCA'sview, article 2.1(1) of the IDD5 applies essentially to the creation of new contracts of insurance and not the assignment of rights under existing policies. As such, where a solicitor or licensed conveyancer arranges an assignment of a contract of insurance, the exclusion in article 67 remains of potential application. For similar reasons, trustees advising on or arranging assignments of contracts of insurance may, in certain circumstances, be able to rely on the exclusions in article 66 of the Regulated Activities Order.

2There are two types of travel risks covered by PERG 5.11.13G (4)(b). The first type covers damage to, or loss of, baggage and other risks linked to the travel booked with the provider where that travel relates to attendance at an event organised or managed by that provider and the party seeking insurance is not an individual (acting in his private capacity) or a small business.

(2)

"Small business" means a sole trader, body corporate, partnership or unincorporated association which had a turnover in the last financial year of less than £1,000,000. But if the small business is a member of a group within the meaning of section 262(1) of the Companies Act 1985 (and after the repeal of that section, within the meaning of section 474(1) of the Companies Act 2006), reference to its turnover means the combined turnover of the group. Turnover means the amounts derived from the provision of goods and services falling within the business’s ordinary activities, after deduction of trade discounts, value added tax and any other taxes based on the amounts so derived.

(3)

The second type of travel risk is damage to, or loss of, baggage and other risks linked to the hire from the insurance provider of an aircraft, vehicle or vessel which does not provide sleeping accommodation.

(4)

PERG 5.11.13G (4)(a) does not apply to the hire of an aircraft, vehicle or vessel but does cover hire purchase and similar agreements.

In the FCA's view, the liability risks referred to in PERG 5.11.13G (5) cover risks in relation to liabilities that the policyholder might have to others (that is, third party claims). Many policies will provide this sort of cover and so fall outside the scope of the exclusion. For example, a policy that covers the cost of unauthorised calls made when a mobile telephone is stolen includes 'liability risks' and would not be a 'connected contract of insurance'. By contrast, travel policies which provide cover in respect of the policyholder's personal liability while travelling may fall within the exclusion by virtue of PERG 5.11.13G (5), where sold as part of a package by event organisers.2